🖨️ Is this 3D-printed center the future of CRE?

👋 Hello, Best Ever Community! Yes, we know it’s Sunday. We’re trying something different and bringing you a weekend edition of the Best Ever newsletter. Let us know what you prefer in the poll below.

In this week(end)’s newsletter, 3D printing makes a mark on CRE, industrial rents rise, and multifamily completions surge while starts stall.

🚨 Breaking News: Less than six months until the Best Ever Conference, we’ve locked in two more voices to add to our Best Ever speaker lineup: economist Jay Parsons and serial real estate entrepreneur and best-selling author David Osborn.

To see these two icons speak live and to take advantage of Early Bird pricing while it lasts, click here and use the promo code BestEver10 for an additional discount exclusively for Best Ever newsletter subscribers.

Let’s CRE!

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CRE HEADLINES

📊 Cap Rates Normalize: Experts have seen indications of multifamily market stabilization in recent weeks, according to Globest.com, including increased activity from buyers. But while cap rates normalize, they caution that despite rate cuts, property values won’t immediately respond.

🏭 Industrial Revolution: National industrial in-place rents are up 7.3% YoY despite record supply driving vacancy rates up 30 bps YoY to 6.4%. The average rate for new leases signed in the past 12 months was $10.54 per square foot, $2.39 more than the average for all leases.

🚭 War on Smoking: Minnesota has banned marijuana smoking and vaping in apartments, except for medical users, the first statewide ban on cannabis in private units. In California, 85 municipalities have enacted local bans on smoking in multifamily housing.

🌊 Office Tides Turning?: In Q2, 37 out of 64 major U.S. office markets posted positive net absorption — the highest since Q2 2022 — compared to 23 markets a year prior. Experts, however, caution that the trend could be short-lived.

👻 Landlords Spooked: Landlords are changing the way they set rents in the wake of the DOJ’s antitrust lawsuit against RealPage alleging it used private, competitively sensitive data. Some landlords are so spooked that they’re moving away from algorithm-driven software altogether.

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IS WALMART’S 3D-PRINTED CENTER THE FUTURE OF CRE?

A Walmart Supercenter in Athens, Tenn., made commercial real estate history this month by constructing one of the largest 3D-printed CRE projects in U.S. history. The 8,000 sqft space is a warehouse designed to hold items customers buy online while they await pickup or delivery.

The project proved to be an example of both the potential and the current failings of 3D printing as a construction solution. The project was eventually completed, but weeks behind schedule, largely due to:

• Materials: The pump used to start the project was incompatible with the concrete mixture, which caused hoses to clog.

• Weather Conditions: The building material overheated in Tennessee’s 110-degree heat, so the crew used water to cool the concrete back down to the ideal printing temperature before pivoting to exclusively printing at night for the lower temperatures.

• Pumping Height: The project’s 20-foot-high walls are the tallest ever constructed by 3D printing. Generating pump pressure to reach those heights was an early struggle, according to Zachary Mannheimer, founder and chairman of Alquist 3D, which led the project.

The project eventually found its groove, though. At one point, the workers were able to complete 325 sqft in a few hours with a team of three people, printing at 200 millimeters per second, which is pretty fast, by 3D printing standards. That’s the groove they need to hit consistently to make 3D printing viable.

Other 3D Printing Projects: Alquist completed three homes in Virginia after teaming up with Habitat for Humanity. In terms of indoor environmental quality, gases, and humidity, the homes are reportedly performing better than traditionally constructed houses. But a 10-home development project in Iowa didn’t fare as well. The company experimented with various 3D printing techniques and materials for the exterior walls, but the initial home was demolished after superficial cracks appeared.

WHAT IT ALL MEANS

The promise of 3D printing is that it can complete projects faster and more cost-effectively. In the Walmart project’s case, the cost was roughly the same as traditional construction, but the company still has more than 200 projects like it in the pipeline. As Alquist and other 3D printing firms continue to refine their processes and work out kinks, the 3D printing process could prove a more viable building strategy, despite its current limitations.

_{🎟️ BEST EVER CONFERENCE}
HUGE SPEAKERS, NEW TICKET OPTIONS, HANDS-ON WORKSHOPS

We are less than six months away from the 9th Annual Best Ever Conference — March 3-5, 2025 in Salt Lake City — and that means we’re locking in the best speakers, the best sessions, and the best parties we’ve EVER had.

Here’s what’s new:

• Jay Parsons and David Osborn — two of the biggest voices in CRE — will grace the BEC stage as keynote speakers. Session details coming soon.

• We are offering a NEW general admission ticket exclusively to accredited limited partners for a 25% discount compared to regular general admission.

• We are launching 6 new workshops, all of which are included in VIP and Conference Plus tickets and can be added on to General Admission tickets.

🚨 Even Better News: Best Ever Newsletter subscribers like you get a special discount off VIP, Conference Plus, and regular General Admission tickets. Simply click the button below and use the code BestEver10 at checkout!

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MULTIFAMILY COMPLETIONS SURGE AS STARTS STALL

Multifamily completions have continued to surge. According to Census data released this week, in August, privately owned multifamily buildings (5+ units) saw a completion rate of 740,000 units, a 56.4% increase from July's 473,000. This marks the highest monthly figure since April 1974 (781,000). 

Meanwhile, there has been a historic slowdown in multifamily construction. The 2024 year-to-date gap between completions and starts (168,800 units) is the largest since record-keeping began in 1968.

Economist Jay Parsons shared the potential implications of this trend:

• Supply Dropoff: “More housing” is a rallying cry on the campaign trail, but according to Parsons, regardless of who wins the White House, multifamily supply is almost certain to drop off in 2026-28 compared to 2023-25.

• Renewed Optimism: The heavy completion wave should continue into the first half of 2025 before thinning out, influencing investor strategy as investors take on apartments with weak fundamentals in year one based on renewed optimism for year two and beyond.

• Rent Rebound: Today's newly built apartments are taking longer to lease up and often leasing at rents below pro forma to compete with the wave of supply, Parsons writes. But thinning supply levels starting around mid-2025 could help drive a rebound, assuming the economy holds up.

For Parsons’ full commentary, visit his post on LinkedIn. To secure a spot to see Parsons live at the Best Ever Conference and take advantage of Early Bird pricing while it lasts, use the code BestEver10 at checkout for an additional discount as a gift for being a loyal Best Ever reader.

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ADDING INFRASTRUCTURE AND OVER $1 MILLION IN VALUE TO 72 VACANT LOTS

Brandon Cobb and the team at HBG Capital added over $1 million in value to 72 vacant lots, which they sold to a national home builder. Here's how they did it 👇

🏢 Property Details: The 72 total lots spread across two separate properties were purchased in December of 2021. They were completely vacant improved land lots.

💸 Finances: One of the properties was purchased for $500,000 and the other for $725,000. The debt for the project came strictly from limited partners who were put in first position, so there was no bank involved. The team raised $1,783,000 for phase one and $2,200,000 for phase two (see phase details below).

💼 Business Plan: The plan was simple - add value by adding infrastructure to the land in the form of grading, utilities, roads, curbs, and gutters. In phase one, the team developed 36 improved land lots for 36 townhomes, and in phase two, the team developed an additional 34 improved land lots for 34 single-family homes. All 72 lots were then sold to a national home builder.

🍾 Results: Phase one was sold for $2,340,000, and phase two was sold for $2,880,000 to a national home builder who went on to actually build the townhomes and single-family homes. The sale produced an 18% preferred return for investors.

If you have a deal you'd like us to feature, share it with us!

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FREE DOCUMENT DOWNLOAD

Should You Offer Non-Refundable Earnest Money?

Earnest money — also referred to as an earnest deposit, escrow deposit, or good faith money — is a deposit made to the seller that represents a buyer’s good faith to buy a property. This document outlines the thought process for determining whether you should offer earnest money at all.